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Re-Opening Irvine Lake a Win-Win for Taxpayers and Outdoor Enthusiasts

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Re-Opening Irvine Lake a Win-Win for Taxpayers and Outdoor Enthusiasts Re-Opening Irvine Lake A Win-Win for Taxpayers and Outdoor Enthusiasts GRAND JURY 2018-2019 Table of Contents SUMMARY ................................................................................................................................... 3 REASON FOR THE STUDY ...................................................................................................... 3 METHOD OF STUDY ................................................................................................................. 4 BACKGROUND AND FACTS ................................................................................................... 5 Background History……………………………………………………………………….5 History of Water Recreation………………………………………..……………….…….5 Involvement of Orange County Parks Department (OC Parks)………………………..…6 Memorandum of Understanding - 2003………………………………………..…………7 Conditions Needed to Satisfy Irvine Company's IOD Transfer………..…………………8 Current Ownership and Control…………………………… ………….....……………...10 The Impact of Water Levels at Irvine Lake……………………………….……..……...10 Lack of Formal Planning for Irvine Lake………………………….…………………….12 Parameters of Negotiation………………………………………….…………………….13 FINDINGS ................................................................................................................................... 18 RECOMMENDATIONS ............................................................................................................ 19 RESPONSES………………………………………………………………………………..…..21 REFERENCES………………………………………………………………………… ………23 APPENDIX…………………………………………………………………….……………..…25 PHOTOS………………………………………………………………………………………...26 2018-2019 Orange County Grand Jury Page 2 SUMMARY The Grand Jury has determined the cause of the closure of Irvine Lake to the public in 2016, and why it remains closed. As of the end of 2018, it has remained closed; however, in 2019 there is reason for optimism on multiple fronts. This report from the Grand Jury intends to provide useful background for interested residents of Orange County as to the specific interests and driving factors of the three public agencies involved. This report also will provide some insight on the sequence of legal issues to be resolved. The Grand Jury intends to provide a possible road map to a successful resolution of the outstanding issues among the parties. Irvine Lake is the largest fresh water body in Orange County. Since 1941, the lake has provided the residents of Orange County with a unique opportunity for a variety of recreational activities. In 2014, The Irvine Company made public its intention to transfer certain land parcels it owned surrounding Irvine Lake to Orange County in perpetuity for the benefit of its residents. The land transfer triggered a series of negotiations among, primarily, Orange County Parks, Serrano Water District and Irvine Ranch Water District, seeking agreements on certain matters to move the action forward. Those negotiations stalled and in March 2016, Irvine Lake was closed to the public for fishing, boating and other water recreation. This closure has and continues to result in lost revenues for Orange County taxpayers in addition to lost recreation for its residents. Finally, there is good reason to believe that Irvine Lake and the property transferred to Orange County by The Irvine Company will once again provide residents with a unique recreational experience. Further, the involvement of the Orange County Parks in the future of Irvine Lake has the potential to make the recreational land and water experiences at the Irvine Lake area property better and more varied than ever before. REASON FOR THE STUDY The three public agencies involved in the future operations of Irvine Lake have not announced a plan for its reopening for recreation use since its closure in 2016. The Grand Jury examined the reasons that the lake remains closed. Irvine Lake has provided recreation opportunities to the residents of Orange County since 1941. In 2014, The Irvine Company (TIC) agreed to dedicate 2,500 acres surrounding Irvine Lake to the residents of Orange County to enjoy as permanent open space. This dedication required an agreement between the two water districts actively involved in the management of Irvine Lake regarding access to Irvine Lake and future recreation rights: Serrano Water District (SWD) and Irvine Ranch Water District (IRWD). Orange County Parks (OC Parks) would be the governmental agency responsible for restoring and maintaining the newly dedicated public land, and in consideration would receive TIC’s interest in water recreation rights at Irvine Lake, plus additional adjacent land parcels (see Appendix, Exhibit 1); therefore, OC Parks would need to be a party to any new agreement(s). 2018-2019 Orange County Grand Jury Page 3 The three primary parties (SWD, IRWD and OC Parks) began negotiations in 2014 but by early 2016 had failed to make any real progress. This impasse resulted in a termination in March 2016 of the existing agreement between TIC and SWD with respect to recreation rights. Irvine Lake has remained closed to the public for water recreation through the balance of 2016 until the present. Given the historic importance of Irvine Lake for water recreation to Orange County residents, the continued lack of progress in the negotiations between the relevant government agencies, and a general lack of understanding of the underlying issues by the residents of Orange County, the 2018-2019 Orange County Grand Jury (Grand Jury) elected to conduct an investigation, employing its particular powers to gather information, for the benefit of Orange County residents. The report will describe interagency dynamics that have resulted in the current impasse among SWD, IRWD and OC Parks with respect to the reopening of Irvine Lake. The Grand Jury will investigate methods for improving those dynamics to allow for the successful resolution of negotiations and reopening of Irvine Lake. METHOD OF STUDY The Grand Jury identified and interviewed key stakeholders involved in the negotiations. The interviews identified basic principles or restraints driving the negotiating parameters, such as the priority of providing safe water supplies over the need for recreation, the need to generate sufficient income to cover water infrastructure costs, and the need to obtain sufficient returns to maintain and improve land newly dedicated to the public. The Grand Jury reviewed information about past recreational services and solicited suggestions to expand recreational and revenue generating capabilities of the area. Members of the Grand Jury toured Irvine Lake and all adjacent properties that are part of the negotiations and expected to be part of future OC Parks development plans. They reviewed the condition of existing improvements and issues affecting property access. The Grand Jury reviewed multiple articles in local newspapers that provided coverage of the closing of Irvine Lake and limited coverage of the ongoing negotiations, plus material on the general background of the history of Irvine Lake and its status. The Grand Jury reviewed existing development or redevelopment plans for the recreational facilities and services offered for Irvine Lake. These included estimates for associated costs and investments as well as expected future revenue streams. The Grand Jury reviewed existing agreements among relevant parties and their successors dating back to 1928, written communications between the parties, and limited historical financial operating information. The stakeholders also provided legal background and documentation as to the sequence that negotiations should follow to be successful. 2018-2019 Orange County Grand Jury Page 4 BACKGROUND AND FACTS Background History Santiago Dam (also known as Santiago Creek Dam) is an earthen and rock filled dam across Santiago Creek within Orange County, forming Irvine Lake. The 136-foot earth dam and its reservoir primarily provide for water storage. The dam and reservoir secondarily provide recreational opportunities. It lies east of the city of Orange and north of Irvine. Irvine Lake is the largest body of fresh water entirely within Orange County. Construction on the dam commenced in 1929 with a joint agreement by the Irvine Company and Serrano Irrigation District. After they graded the site they built the dam using dirt and rock excavated from the sides of the canyon. They completed the structure in 1931, and its reservoir, Irvine Lake, was filled by 1933. By the late 1930s, the lake had been stocked with fish. It was opened to the public for recreational use in 1941. The dam’s initial purpose was for, irrigation and municipal water use. With heavy suburban sprawl that has occurred since the 1960s, agriculture along lower Santiago Creek has been drastically reduced. Conversely, the need for water storage and distribution to urban users has increased. It is currently owned by the Irvine Ranch Water District and the Serrano Water District (the former Serrano Irrigation District). Today the dam marks the end of Santiago Creek. All the discharge is retained in the reservoir and downstream flow is limited to seepage and released storm water. 1 History of Water Recreation The recreation rights to the waters of Irvine Lake were initially established under a February 6, 1928 settlement agreement between TIC, Carpenter Irrigation District and the Serrano Irrigation District, predecessor to SWD (“1928 Agreement”). The 1928 Agreement generally deals with the use of Irvine Lake as a reservoir by the parties. Over the decades, the parties to
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